4.4 million children given savings start
Quarterly Child Trust Fund (CTF) statistics released today by HM Revenue and Customs (HMRC) reveal that 4.4 million children under seven in the UK now have a Child Trust Fund.
Leading Child Trust Fund provider, The Children’s Mutual, says that these figures show the continuing revolution in children’s savings and highlights parents’ commitment to their children’s futures in the current environment.
David White, Chief Executive, The Children’s Mutual said:
“These latest figures show that the Child Trust Fund generation is growing steadily and, unlike any generation before them, in 11 years’ time the first CTF recipients will reach adulthood with greater financial knowledge and an important financial headstart. The average amount saved each month by our CTF customers is £24. Over 18 years, these savings could produce a fund of around £9,750, a significant financial help for young adults who may want to attend university or put down a deposit on their first home.
Mr White continued: ‘Our research shows that despite the recession we are currently experiencing, parents still feel that saving for their children and giving them the best future they can is very important. In the last year we’ve seen a considerable rise in the number of CTFs being opened with us (a 16 per cent increase on 2007). In addition, we experienced record months for the number of parents with newborns opening their CTF online with us in May and June this year.
“It is now more important than ever during these challenging economic times, that parents take the time to choose where to open a CTF and start saving towards their child’s future. And now that parents no longer have to hand over a CTF voucher when opening a CTF, it’s even easier and faster for them to set up their child’s account. The engagement of families is very important and even grandparents, aunties, uncles and family friends can all save together to top up the CTF to the maximum amount of £100 a month.
Indeed, had a product similar to the CTF existed 18 years ago and family and friends saved £100 a month in a shares-based plan for a child over that time, that youngster could now have the benefit of a fund worth £37,400.”
 £9,750 future projected value is based on investing £24 a month (plus the government’s initial £250 voucher and another £250 at age 7) for 18 years in a stakeholder CTF account. We’re assuming an investment return of 7% a year, and charges of 1.5% of the CTF account value each year. Projected values aren’t guaranteed because the value of shares goes up and down. So the final payout could be more or less than this.
 The assumed maturity figure is based on a hypothetical calculation, tracking the real performance of shares over 18 years, from 1991 to 2009. They include £250 invested at the child’s birth and at age seven and 1.5% charges, as with the Stakeholder CTF today. This assumes investment in the FTSE All-Share index over that period including reinvestment of the dividend yield. The figures also include lifestyling. Amount Received as at end May 2009.